Relentless
00:19:28 · Ty Morse, Brian Armstrong
[00:19:28] S1: What do you think that he did that you just could not have done on your own? [00:19:32] S0: Yeah. So I think, you know, I was definitely still a little bit in my a little more awkward engineer introvert phase. Like, was writing a ton of code, and I was... For, like, half the day, I'd be, like, locked in, you know, like, headphones in and just trying to keep the site going, and I was writing a ton of code. And then the other half of the day, would try to go do all the million other things that we all had to go do. And Fred was a really nice balance to that. He was often kind of like external facing. He was really kind of like shielding me from a bunch of stuff that had to be done where it was like, okay. I'm gonna go talk to these 14 investors, and, you know, I'm gonna go put on a suit and talk to these regulators. And he would just... He would do anything. And so anyway, we we both could do these things, but we each played to our strengths. And eventually, I stopped writing so much code, and I was like, alright. Let me let me try to lean into that, some of these other duties as well. But, yeah, he he was a perfect, like, cofounder in that sense of just willing to do anything, get shit done, and it was super collaborative. [00:20:32] S1: So the exact quote is all the decisions in the early days. Me and Fred would just get in a room, hash out the options, choose the least bad one, and move forward. What were some of those decisions that you had to make that were just the least bad ones?
00:20:46 · Brian Armstrong
[00:20:46] S0: I mean, I remember one of them was the decision to go get a bunch of money transmission licenses. I don't know. It might sound like kind of in the weeds, but... And there's probably, like, four or five of these kind of things every week, right, that were not the easy decisions, but the the the hard ones. And, you know, I remember we we launched the product under this legal understanding that we were not a money transmitter, but we felt as we grew in scale, we'd just get more and more scrutiny, we eventually had to go get it. And I remember we had a lawyer at that time who kind of told us, I don't think you need this. Like, why don't you guys just fly under the radar for a while? And we and we made the... We said, that doesn't sound right to us. Like, we wanna start investing in this thing now because it would it would decrease legitimacy. It would help us land bigger clients. And they said it would take about $5,000,000 and maybe three or four years to get money transmission licenses in all 50 states in The US, and we made it kind of contrarian bet at that time to actually go and do that. As a young company. It was a huge percentage of what we had raised. It was a major amount of work. Some of the states came back and said, we don't even know what Bitcoin and crypto is. Like, we're not going to give you the license. And we said, well, what if we were storing dollars? We're doing that too. Can we get the license for that? It was such an interesting meeting of like 50 different states with their own culture and everything and trying to understand... Get them to understand what we were doing. I mean, that was just one random example. A lot of it was the people stuff. It's like, okay. These two teams aren't getting along. So do we fire this one or this one or both? You know? Because, like, they're just refusing to work with each other. So... Yeah. I'd say the personnel decisions were, like, some of the harder ones.
00:22:23 · Ty Morse, Brian Armstrong
[00:22:23] S1: How did you kinda sort that in your mind and get better at making those personal decisions over time? [00:22:28] S0: I think the first thing was we had a real scarcity mentality for a while about people. And, you know, I think to a large degree, that's healthy. If you find great people, you have to really work to retain them. But we were such a scarcity mindset because we we started... It was hard to get anybody to join, and we were we were in the midst of this kind of, like, zero interest rate phenomenon in Silicon Valley where every engineer was getting, like, five offers from, like, Google and Meta, and, like, you know, we were this little start up. And so, you know, we were kind of walking on eggshells in some ways, and this actually created, I think, bit of a negative cultural environment in Silicon Valley for a while, led to some of that employee activism and stuff. But, you know, we were so afraid of losing anyone that I think once we shifted a little bit, like the zero interest rate phenomenon went away, we became like a remote first company, so we have access to pools of talent, like, in much larger segments of the world. And it allowed us to really have a healthier relationship, I think, where we said, we want the right person and the right job, and if someone's not living the values or they're not collaborating well with their colleagues, like, we just had less tolerance for that, and we were able to make quicker decisions.
00:23:31 · Ty Morse
[00:23:31] S1: I find it interesting that you worked at Airbnb directly before Coinbase, and the way that they initially figured out monetization was Brian at, like, South by Southwest stays with, you know, a host and forgets to pay over the course of, like, three separate nights. He committed that he was gonna bring the money the next day, forgets to pay, bringing the next money the next day, forgets to pay. And at the end, you know, the host thinks that basically the founder of this platform is freeloading off of it. And I find it funny because the way that Coinbase initially figured out monetization was also this obvious thing that was basically what if you could just buy Bitcoin? And that wasn't the first version of the product that you you released. Yeah. Do you see any, like, similarities in the story of Coinbase and Airbnb in that way?
00:24:18 · Brian Armstrong, Ty Morse
[00:24:18] S0: Well, I mean, working at Airbnb, I definitely internalized a lot of lessons. That story I actually had not heard about Airbnb, but I think there is something common amongst those two things, which is you have to just get started with anything, and it's almost certainly the wrong thing, but that's okay because this action produces information idea, right? Like if just launch the first thing you can think of, and then in the act of doing that, you will see what you should have done. If you don't... What most people fail is they actually never take the first step. They actually just... They're stuck in analysis paralysis or they're too risk averse, and they never do anything. So you have to be willing to take these steps into [00:24:54] S1: the unknown and just try the first thing that comes to mind and then iterate from there. Do you have any other really good examples of times where you took action when you think other people might not have?
00:25:04 · Brian Armstrong
[00:25:04] S0: Actually, internally at Coinbase, for a long time, we had just a retail product, and most people know us for that. But today, we actually have, like, a very large institutional product for crypto as well that does trading and custody and financing and all kinds of things. It's it's the leading product in the institutional space. So there was a moment there where we were thinking, alright. Institutions are gonna come into crypto. Maybe we should try to launch something here for custody and trading. And we went and talked to a couple of startups out there that were working on this, and we got really close to actually buying one of these companies as a way to kind of start the team. And for whatever reason, it didn't quite work out with that company. And I remember thinking we just need a bias for action. Like... And I kinda set this crazy... It was like a Friday or Thursday night or something like that when this team kinda told us, nah. We don't wanna take your offer to be acquired. And I was like, Monday, we're launching our institutional product. And people are like, what are you talking about? Like, this is gonna take, like, six to twelve months to build it, the version one. And I was like, no. We're launching a v one on Monday, like, because this company turned us down. You know? And I was kinda like Fuck them. Yeah. I was a little pissed about that. And so we basically threw together a landing page, like a marketing page. We started to sketch out what some of the back end might... Because we built a lot of stuff that could be repurposed. And Monday morning, like, we announced it, and it had like a page where you can... All you could do was come and sign up and be... Express interest. And then we went and hired like the right person to go kick it off and run it. We had more... Like in our New York office, we had more people with institutional connections. We tried a bunch of things which totally flopped. Like we initially went after the biggest institutions in the world, the biggest, like Goldman Sachs and like BlackRock or whatever. Yeah. And we were so unprepared for it. We basically failed by going after the big ones. So then we totally changed our strategy. We went after the smallest institutions, like a two person hedge fund or a couple of crypto traders or whatever and family offices, and so we started to land some minnows.